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Challenges Faced By The Manufacturing Industry.

Manufacturing Industry and its problems


It is a known fact that manufacturing industry is the backbone for any country and it makes difference to its GDP, Employment, Import & Export, Domestic consumptions etc. Even Singapore is trying to reposition itself a manufacturing hub for electronic components. USA wants to be number 1 in manufacturing by 2020 such that the US companies that have offshore their production capability to China and India will come back. Time will tell whether it happens or not as the basic structure, taxes and govt support are the basic challenges that are faced by Manufacturing Industry.


Manufacturing Industry: Problem facing Manufacturing Industries.

Manufacturing Industry

Today, in India, there are many problems faced by manufacturing industry. List of Challenges faced by manufacturing sector in India.

Manufacturing Industry: Basic Environment or Ecosystem for Manufacturing.

When India got its freedom, Government of India setup large public sector companies like BEL, BEML, BHEL, HMT etc with a focus on manufacturing process with a Focus to create an EMPLOYMENT rather than building a manufacturing eco-system. This was done more from social economic reasons. But without their knowledge they created small hubs of ancillary factories to feed them. Today these small units are catering to many more business and have become large companies.

Many of these Public sector companies built the reputation for quality products and services

Manufacturing Industry: Lack of Innovation.

Lack of innovation in production process, planning, machine capability etc. There are no skilled persons available in the market. ITI and other technical training centres are producing the skilled labor who are using old technologies and they are not a “ready fit for market”. Industries have to invest in them to bring them to a level.

Today, we don’t have a good research and development kind of facilities where the young generation can try and learn new things. Where they can come with new innovations and begin to apply in large business. If we don’t build organisation with Innovation as a primary focused agenda for growth, how can we build next generation?

We need right skillset people to work and manage the business then only companies can grow.


Manufacturing Industry: Taxes and compliances.

Post GST it seems India will have one tax and one rule. Till now it seems a distant dream and has its own teething problem. It seems most of the people are clueless on how the taxes are applied and why it is like this?

So everyone is going with a safe bet of follow the earlier rule so that they are not at the wrong side of the government.

Manufacturing Industry: Lack of Infrastructure and basic facilities.

If you visit some of the manufacturing hubs like Peenya at Bangalore or Focal Point at Ludhiana or Jalandhar or at Panipat, you will surprise to see that how these business moguls are running the business? Roads are filled with pot holes bigger then 3 feet deep, filled wth dirt water etc. Seems no one is worried and many times, the business owners can’t fight against the government machines and give up. So they live with the current anarchy.

Power Supply is the biggest problem and cost of the basic facilities is sky rocketing. There are industry sectors totally shutdown due to lack of power and basic infrastructure.

Roads and infrastructure are bad and governments are not focussing.

But now a days its improving with new investments towards infrastructure etc.


Manufacturing Industry: Right technologies and not to implement them.

Many SMEs are afraid to invest into new technologies as they become obsolete in 3 years. The starting investment, pain of transformation and challenges in managing the business makes them not to seek new technologies. More than that they are also not aware of their problems and no one to advice or guide them.

in India, if anyone is looking for a ERP solution means he has reached peak and can’t handle the work alone or big MNC has put a pressure on him to streamline the process or they will cancel his orders.

When you are looking to implement a new process and control, there is specific need of ERP for Manufacturing companies. This is different from many ERPs in the market that focusses only on invoice, billing, payment and receipts.

Manufacturing Industry: Manufacturing ERP contains the following modules to begin with.

  1. Manufacturing module– Manufacturing basically covers three segments in any factories. Few companies may use all the three modules and some many have only one.
    1. In-house production –Bill of Materials, Finished Goods receipts, Work Orders etc. It helps to track the materials from Purchase to Sales with tracing the materials and its finished goods.
    2. Subcontracting Operations – manage your subcontracting operation and track your inventory.
    3. Jobwork – One of the biggest issue with Jobwork operation is managing customer materials and how much its consumed.
  2. Inventory Control and Stock management– Optimise the Inventory process and controls. Manage RM, Consumables, Finished goods, Tools and Dies etc. Manage the costing and identify the items movement etc.
  3. Quality – Quality is an important subject to handle in ERP for manufacturing. Typically Quality Checking happens at multiple levels in business like during Receipt of materials, FG reporting, production stages etc. Many times, goods are received at Inspection location and only after their clearance the stock goes to Stores.
  4. Sales and Invoices – Handles Sales Orders, Invoices and Sales Returns. These are integrated transactions and helps to manage Inventory and Customer receipts.
  5. Purchase and Goods Receipts – Procure the materials based on Purchase indents and PO. Once the materials come to store, pay the money based on the goods received.
  6. Payments and Receipts – All the payments towards Suppliers, Service providers, expenses and Customer receipts and other incomes are booked here.
  7. General Ledgers – All the transactions that are originated from Inventory Transactions, Goods Receipts or Shipment / Invoicing, Financial transactions have an impact on Financials. These transactions are consolidated to generate Balance sheet, Profit and Loss sheet etc.
  8. Financial control and reports – All the reports like Cash-flow reports, Financial Ratios, Debtor Creditor reports etc. need to be checked regularly
  9. Taxes – Purchase receipt or Invoicing, Payment and Receipt have an impact on the taxes as we have to either Pay taxes or collect and Pay taxes to govt. Many times, we can pay the net amount based on the tax collections.

AcTouch Cloud ERP: ERP System for Manufacturing Industry. Call us now.


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Nityananda Rao, (BE, PGDGM and INSEAD Alumnus), is the CEO of AcTouch Technologies with 20+ years of experience in ERP, Banking and Treasury Solutions. He is a Mechanical engineer who worked on shop-floor with CNC Machines, SP-300 like Injection Moulding machines. He is a authority on ERP and it's features. Prior to starting AcTouch Tech, he worked with Infosys, Misys, Murex etc managing APAC region as profit centre.